What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2023-08-08 compared with 2023-05-10 · 87 added, 77 removed, 133 unchanged (55% of the section changed)

4 unchanged sentences

The following discussion contains “forward-looking statements” that reflect our plans, estimates, beliefs and expected performance.

Our actual results may differ materially from those anticipated as discussed in these forward-looking statements as a result of a variety of risks and uncertainties, including those described above in “Cautionary Note Regarding Forward-Looking Statements,” in the risk factors included in “Item 1A.

Risk Factors” in our 2022 Annual Report and included elsewhere in this Quarterly Report, all of which are difficult to predict.

Our actual results may differ materially from those anticipated as discussed in these forward-looking statements as a result of a variety of risks and uncertainties, which are difficult to predict, including those described above in “Cautionary Note Regarding Forward-Looking Statements,” and in the risk factors included in “Part I, Item 1A.

Risk Factors” in our 2022 Annual Report and in “Part II, Item 1A.

Risk Factors” of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2023.

In light of these risks, uncertainties and assumptions, the forward-looking events discussed may not occur.

4 unchanged sentences

onshore market.

On February 28, 2023, Cactus acquired FlexSteel, which similarly grew from its founding in 2003 to its current status as a leading provider of spoolable pipe technologies to the U.S.

On February 28, 2023, Cactus acquired FlexSteel, which similarly grew from its founding in 2003 to its current status as a leading provider of spoolable pipe technologies primarily to the U.S.

onshore market.

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We believe this acquisition enhances our position as a premier manufacturer and provider of highly engineered equipment to the E&P industry and should provide meaningful growth potential.

We further believe FlexSteel’s products are highly complementary to Cactus’ equipment at the wellsite as it expands our exposure to our customers’ operations from production trees to transportation of oil, gas and other liquids as well as to additional customers operating in the midstream area.

We further believe FlexSteel’s products are highly complementary to Cactus’ equipment as it expands our exposure to our customers’ operations from production trees to transportation of oil, gas and other liquids as well as to additional customers operating in the midstream area.

Demand for our products and services depends primarily upon oil and gas industry activity levels, including the number of active drilling rigs, the number of wells being drilled, the number of wells being completed, and the volume of newly producing wells, among other factors.

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Field service and other revenues are primarily earned when we provide installation and other field services for both product sales and equipment rental.

During the three months ended March 31, 2023, we derived 70% of total revenues from the sale of our products, 12% of total revenues from rental and 18% of total revenues from field service and other.

During the three months ended March 31, 2022, we derived 65% of total revenues from the sale of our products, 15% of total revenues from rental and 20% of total revenues from field service and other.

During the six months ended June 30, 2023, we derived 73% of total revenues from the sale of our products, 11% of total revenues from rental and 16% of total revenues from field service and other.

During the six months ended June 30, 2022, we derived 65% of total revenues from the sale of our products, 15% of total revenues from rental and 20% of total revenues from field service and other.

We have predominantly domestic operations with more limited operations in Australia, Canada, and the Middle East as well as sales in other international markets.

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We also provide rental and service operations in the Kingdom of Saudi Arabia.

Pressure Control manufacturing facilities are located in Bossier City, Louisiana and Suzhou, China.

Pressure Control manufacturing and production facilities are located in Bossier City, Louisiana and Suzhou, China.

Demand for our product sales in the Pressure Control segment are driven primarily by the number of new wells drilled, as each new well requires a wellhead and, after the completion phase, a production tree.

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The Spoolable Technologies segment designs, manufactures, and sells spoolable pipe and associated end fittings under the FlexSteel brand.

Our customers use these products as production, gathering and takeaway pipelines to transport oil, gas or other liquids.

Our customers use these products primarily as production, gathering and takeaway pipelines to transport oil, gas or other liquids.

In addition, we also provide field services and rental items to assist our customers with the installation of these products.

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As previously discussed, we completed the acquisition of FlexSteel on February 28, 2023.

The results of operations of FlexSteel have been reflected in our accompanying condensed consolidated financial statements from the closing date of the acquisition through March 31, 2023.

See Note 2 to our accompanying condensed consolidated financial statements for additional information related to the acquisition.

The results of operations of FlexSteel have been reflected in our accompanying condensed consolidated financial statements from the closing date of the acquisition through June 30, 2023.

See Note 2 to the unaudited condensed consolidated financial statements for additional information related to the acquisition.

Oil and Natural Gas Prices

The following table summarizes average oil and natural gas prices in North America over the following periods as well as industry activity levels as reflected by the average number of active onshore drilling rigs during the same periods.

Three Months Ended

March 31, 2023 December 31, 2022 March 31, 2022

Three Months Ended Six Months Ended

June 30, 2023 March 31, 2023 June 30, 2023 June 30, 2022

WTI Oil Price ($/bbl) (1)

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Land Drilling Rigs (3)

698 742 720 658

(1) EIA Cushing, OK WTI (“West Texas Intermediate”) spot price.

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(3) Baker Hughes.

Oil and gas industry activity levels remained robust through the first quarter of 2023 with average U.S.

land drilling rigs declining by less than 2% from the fourth quarter of 2022.

This was despite a significant drop in natural gas prices, with average prices declining by 52% from the fourth quarter of 2022.

We expect activity levels in basins driven by gas drilling to respond to the decreases in natural gas price over the coming quarters, as there is a lag between price movements and the ability for oil and

gas operators to respond to such movements due to, among other factors, rigs under contract, pads not completed, access to liquefied natural gas terminals and hedges in place.

Oil prices declined on an average basis from the fourth quarter of 2022 to the first quarter of 2023 by approximately 8%.

We believe oil-driven drilling and completion activity levels will remain relatively stable at these oil price levels but recognize the potential risk of recession on oil prices and diminished cash flow from the sale of associated gas.

During the first quarter of 2023, WTI oil prices ranged from $66.61 per barrel to $81.62 per barrel and reached their lows during the regional bank scare precipitated by the collapse of Silicon Valley Bank in March 2023.

Oil prices improved subsequently as the U.S.

government signaled support for other regional banks.

Shortly after the end of the first quarter of 2023, oil prices were further supported by the OPEC+ decision to cut production by over one million barrels per day.

However, oil prices have remained volatile as concerns remain on the outlook for regional banks and the potential impact further bank failures could have on the economy.

We believe the supply and demand fundamentals are supportive of oil prices at this level assuming overall economic activity remains at current levels.

Oil and gas industry activity levels weakened through the first half of 2023.

The average U.S.

land drilling rigs declined by 8% from the fourth quarter of 2022 with most of the decline occurring in the second quarter of 2023.

Oil prices in the second quarter of 2023 were consistent with pricing in the first quarter of 2023.

Looking forward, we believe global oil inventories will begin to decline as a result of OPEC+ production cuts of over one million barrels per day extending through the end of 2024 along with additional voluntary cuts through September 2023 by Saudi Arabia and Russia.

Oil prices have responded positively to the production cuts with pricing hovering around $75 per barrel beginning in mid-July and closing at slightly higher than $80 per barrel in early August 2023.

We believe supply and demand fundamentals are supportive of oil prices at this level assuming

overall economic activity remains stable.

Despite this, we believe that oil-driven drilling and completion activity levels will continue to decline in the third quarter as cash flows are impacted by lower realized prices from secondary production of natural gas and natural gas liquids, the prices of which continued to decline in the second quarter.

demand for natural gas should remain strong throughout the summer months in response to demand for air conditioning related to high average temperatures, we do not believe such elevated demand will be sufficient to offset surplus supply levels and materially affect the price in the near-term.

As a result, we expect to see a sustained reduction in activity levels in basins driven by gas drilling and where gas is a significant secondary product through the second half of the year.

Critical Accounting Policies and Estimates

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Where appropriate, we have identified specific events and changes that affect comparability or trends and, where reasonably practicable, have quantified the impact of such items.

Three Months Ended March 31, 2023 Compared to Three Months Ended December 31, 2022

Three Months Ended June 30, 2023 Compared to Three Months Ended March 31, 2023

The following table presents summary consolidated operating results for the periods indicated:

Three Months Ended

March 31, 2023 December 31, 2022 $ Change % Change

June 30, 2023 March 31, 2023 $ Change % Change

(in thousands)

2 unchanged sentences

Total revenues 305,819 228,405 77,414 33.9

Operating income

Operating income (loss)

Pressure Control 54,540 49,439 5,101 10.3

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Total operating income 48,522 49,688 (1,166) (2.3)

Interest income, net 1,002 2,370 (1,368) (57.7)

Other income (expense), net 3,538 (1,920) 5,458 nm

Interest income (expense), net (5,928) 1,002 (6,930) nm

Other income, net — 3,538 (3,538) nm

Income before income taxes 42,594 54,228 (11,634) (21.5)

Income tax expense 1,940 7,932 (5,992) (75.5)

Income tax expense 10,135 1,940 8,195 nm

Net income 32,459 52,288 (19,829) (37.9)

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Pressure Control.

Pressure Control revenue for the first quarter of 2023 was $194.7 million, an increase of $6.9 million, or 3.7%, from $187.8 million for the fourth quarter of 2022 primarily due to increased sales of wellhead and production related equipment and associated field services.

Pressure Control operating income for the first quarter of 2023 was $49.4 million, an increase of $1.2 million, or 2.5%, from $48.2 million for the fourth quarter of 2022.

The increased revenues and associated gross margins related to equipment sales and field services in the segment were largely offset by increased rental equipment redeployment expenses as well as $1.1 million in higher professional fees and expenses recorded in connection with the FlexSteel acquisition.

Pressure Control revenue for the second quarter of 2023 was $199.1 million, an increase of $4.5 million, or 2.3%, from $194.7 million for the first quarter of 2023 primarily due to increased sales of wellhead and production related equipment offset slightly by lower rental revenues.

Pressure Control operating income of $54.5 million for the second quarter of 2023 increased $5.1 million, or 10.3% from the first quarter of 2023.

The increased revenues and associated gross margins related to equipment sales in the segment were coupled with lower rental equipment redeployment expenses and lower selling, general and administrative expenses (“SG&A”) offset by increased depreciation expense on our rental fleet.

The decrease in SG&A for Pressure Control was primarily driven by lower professional fees and expenses of approximately $6.4 million related to the FlexSteel acquisition, partially offset by higher bad debt expense, increased stock-based compensation expense and higher annual incentive bonus accruals.

Spoolable Technologies.

Spoolable Technologies revenue for the first quarter of 2023 was $33.8 million, an increase of $33.8 million from the fourth quarter of 2022, as results only include revenues from the FlexSteel acquisition date of February 28, 2023 to March 31, 2023.

Spoolable Technologies operating income for the first quarter of 2023 of $0.2 million increased $0.2 million from the fourth quarter of 2022 as this operating profit only includes results from the FlexSteel acquisition date to March 31, 2023.

The results for Spoolable Technologies included $4.2 million of inventory step-up expense and $3.7 million of intangible amortization expense as well as increased depreciation for the step-up of its fixed assets in connection with accounting for the purchased assets at fair value in conjunction with purchase accounting.

Interest income, net.

Interest income, net for the first quarter of 2023 of $1.0 million decreased $1.4 million from the fourth quarter of 2022 as the first quarter included one month of interest expense associated with FlexSteel acquisition-related borrowings from the Amended ABL Credit Facility which offset interest income earned on the invested cash balance.

Other income (expense), net.

Other income, net for the first quarter of 2023 of $3.5 million and other expense, net of $1.9 million for the fourth quarter of 2022 primarily represented non-cash adjustments for the revaluation of the liability related to the tax receivable agreement as a result of changes to the state tax rate.

Spoolable Technologies revenue for the second quarter of 2023 was $106.7 million, an increase of $72.9 million from the first quarter of 2023, as results for the first quarter only included one month of revenues (from the FlexSteel acquisition date of February 28, 2023).

Total operating loss for Spoolable Technologies for the second quarter of 2023 was $6.0 million compared to operating income of $0.2 million for the first quarter of 2023.

The operating loss for the second quarter of 2023 was primarily due to $18.1 million of expense related to the change in fair value of the earn-out payment for the FlexSteel acquisition based on the revised forecast for the earn-out period ending on June 30, 2024.

Both quarters of 2023 included the recognition of expense related to the step-up of Spoolable Technologies’ assets to fair value in conjunction with purchase accounting.

The second quarter of 2023 included a $15.1 million increase in inventory step-up expense and a $5.0 million increase in intangible amortization expense when compared to the first quarter of 2023.

Depreciation expense for fixed assets was also impacted by purchase accounting which results in higher depreciation expense over time.

Total second quarter depreciation expense increased approximately $2.6 million from the first quarter of 2023.

Interest income (expense), net.

Interest expense, net was $5.9 million for the second quarter of 2023 compared to interest income of $1.0 million for the first quarter of 2023.

Interest expense for the second quarter represented three months of associated expense on outstanding borrowings under the Amended ABL Credit Facility in conjunction with the FlexSteel acquisition while the first quarter of 2023 included only one month of such expenses.

Other income, net.

Other income, net of $3.5 million for the first quarter of 2023 primarily represented non-cash adjustments for the revaluation of the liability related to the tax receivable agreement as a result of changes to the state tax rate.

Income tax expense.

Income tax expense for the first quarter of 2023 was $1.9 million compared to $7.9 million for the fourth quarter of 2022.

Income tax expense for the first quarter of 2023 included an approximately $11.0 million expense associated with current income offset by a $12.1 million benefit associated with the release of our valuation allowance previously provided for our investment in Cactus Companies based on the determination that the deferred tax asset was realizable due to our ability to

generate sufficient taxable income of the appropriate type.

Income tax expense for the second quarter of 2023 was $10.1 million compared to $1.9 million for the first quarter of 2023.

Income tax expense for the second quarter of 2023 was primarily due to current income.

Additionally, we recognized $4.3 million expense associated with the revaluation of our deferred tax asset as a result of a change in our forecasted state tax rate and a $1.3 million benefit associated with permanent differences related to equity compensation.

Income tax expense for the fourth quarter of 2022 primarily included approximately $10.1 million expense associated with current income and a $1.8 million tax benefit related to the revaluation of our deferred tax asset as a result of a change in our forecasted state tax rate.

is only subject to federal and state income tax on its share of income from Cactus Companies.

Income allocated to the non-controlling interest is only taxable to the non-controlling interest.

Three Months Ended March 31, 2023 Compared to Three Months Ended March 31, 2022

Six Months Ended June 30, 2023 Compared to Six Months Ended June 30, 2022

The following table presents summary consolidated operating results for the periods indicated:

Three Months Ended

Six Months Ended

2023 2022 $ Change % Change

3 unchanged sentences

Total revenues 534,224 316,114 218,110 69.0

Operating income

Operating income (loss)

Pressure Control 103,979 75,231 28,748 38.2

11 unchanged sentences

Pressure Control.

Pressure Control revenue was $194.7 million in the first quarter of 2023, an increase of $48.8 million, or 33.4%, from $145.9 million for the first quarter of 2022.

Pressure Control revenue was $393.8 million for the first six months of 2023, an increase of $77.7 million, or 24.6%, from $316.1 million for the first six months of 2022.

This was primarily due to higher sales of wellhead and production related equipment resulting from higher drilling and completion activity by our customers.

In addition, increased rental of drilling and completion equipment and field service associated with product and rental revenues increased as a result of the above mentioned activity.

Pressure Control operating income of $49.4 million in the first quarter of 2023 increased $18.4 million, or 59.5%, from $31.0 million in the first quarter of 2022.

The increase was primarily attributable to higher gross margins during the period due to the increased volume partially offset by higher SG&A expenses of $8.6 million associated with professional fees and expenses incurred in 2023 due to the FlexSteel acquisition.

In addition, increased rental of drilling and completion equipment and field service associated with product and rental revenues increased as a result of the abovementioned activity.

Operating income of $104.0 million in the first six months of 2023 increased $28.7 million, or 38.2%, from $75.2 million in the first six months of 2022.

The increase was primarily attributable to higher gross margins during the period due to the increased volume partially offset by higher SG&A expenses.

The increase in SG&A expenses primarily related

to $10.8 million of professional fees and expenses incurred in 2023 associated with the FlexSteel acquisition, higher bad debt expense and higher personnel costs.

Spoolable Technologies.

Spoolable Technologies revenue in the first quarter of 2023 was $33.8 million, an increase of $33.8 million, from the first quarter of 2022 as results only include revenues from the FlexSteel acquisition date of February 28, 2023 to March 31, 2023.

Spoolable Technologies operating profit of $0.2 million in the first quarter of 2023 increased $0.2 million from the first quarter of 2022 as this operating profit only includes results from the FlexSteel acquisition date to March 31, 2023.

Spoolable Technologies revenue of $140.4 million and operating loss of $5.8 million represents FlexSteel results generated from February 28, 2023, the date of acquisition, through June 30, 2023.

The results for Spoolable Technologies included approximately $18.0 million of expense related to the change in fair value of the estimated earn-out payment for the FlexSteel acquisition, $23.5 million of inventory step-up expense and $12.3 million of intangible amortization expense as well as depreciation expense of $5.5 million primarily associated with the step-up of fixed assets in connection with accounting for the purchased assets at fair value in conjunction with purchase accounting.

Interest income (expense), net.

Interest income, net for the first quarter of 2023 of $1.0 million increased $1.1 million from the first quarter of 2022.

The increase was driven by higher interest income earned on cash invested as rates increased over 2022

and into early 2023.

This was partially offset by one month of interest expense in the first quarter of 2023 associated with FlexSteel acquisition-related borrowings from the Amended ABL Credit Facility.

Interest expense, net was $4.9 million for the first six months of 2023 compared to $0.2 million interest income, net for the six months ended June 30, 2022.

Interest expense in 2023 related to outstanding borrowings under the Amended ABL Credit Facility in conjunction with the FlexSteel acquisition.

Other income (expense), net.

Other income (expense), net for both periods presented primarily related to non-cash adjustments for the revaluation of the liability related to the tax receivable agreement as a result of changes to the state tax rate.

Other income, net of $3.5 million for the first six months of 2023 and other expense, net of $1.1 million for the first six months of 2022 primarily related to non-cash adjustments for the revaluation of the liability related to the tax receivable agreement as a result of changes to the state tax rate.

Income tax expense.

Income tax expense in the first quarter of 2023 was $1.9 million compared to an income tax expense of $2.7 million in the first quarter of 2022.

Income tax expense for the first six months of 2023 was $12.1 million compared to $11.5 million for the first six months of 2022.

Income tax expense for 2023 included an approximately $21.1 million expense associated with current income offset by a $12.1 million benefit associated with the release of our valuation allowance previously provided for our investment in Cactus Companies based on the determination that the deferred tax asset was realizable due to our ability to generate sufficient taxable income of the appropriate type.

Additionally, we recognized $4.3 million of expense associated with the revaluation of our deferred tax asset as a result of a change in our forecasted state tax rate and a $1.2 million benefit associated with permanent differences related to equity compensation.

Income tax expense for the first quarter of 2022 included an approximately $6.2 million expense associated with current income offset by a $1.7 million benefit associated with permanent differences related to equity compensation, a $1.0 million benefit associated with the revaluation of our deferred tax asset as a result of a change in our forecasted state tax rate and a $0.8 million tax benefit associated with the partial valuation allowance release in conjunction with first quarter 2022 redemptions of CW Units.

Income tax expense for 2022 included approximately $15.3 million expense associated with current income offset by a $1.7 million benefit associated with permanent differences related to equity compensation, a $1.0 million benefit associated with the revaluation of our deferred tax asset as a result of a change in our forecasted state tax rate and a $1.1 million tax benefit associated with the partial valuation allowance release in conjunction with CW Unit redemptions during 2022.

Partial valuation releases occur in conjunction with redemptions of CW Units (or CC Units, in the case of redemptions after the CC Reorganization) as a portion of Cactus Inc.'s deferred tax assets from its investment in Cactus LLC (or, after the CC Reorganization, its investment in Cactus Companies) becomes realizable.

Liquidity and Capital Resources

At March 31, 2023, we had $75.4 million of cash and cash equivalents.

At June 30, 2023, we had $63.9 million of cash and cash equivalents.

Our primary sources of liquidity and capital resources are cash on hand, cash flows generated by operating activities and borrowings under our Amended ABL Credit Facility (as defined in Note 7 in the notes to the unaudited condensed consolidated financial statements).

Depending upon market conditions and other factors, we may also have the ability to issue additional equity and debt if needed.

As of March 31, 2023, we had $193.3 million of available borrowing capacity with $30.0 million of borrowings outstanding under our revolving loan, $125.0 million of borrowings outstanding under our term loan and $1.7 million in letters of credit outstanding.

Subsequent to March 31, 2023, we made $60.0 million in discretionary payments to our term loan lenders which reduced the balance of our term loan outstanding as of the date of this filing.

We were in compliance with the covenants of the Amended ABL Credit Facility as of March 31, 2023.

We believe that our existing cash on hand, cash generated from operations and available borrowings under our Amended ABL Credit Facility will be sufficient for at least the next 12 months to meet working capital requirements, debt service obligations, anticipated capital expenditures, expected TRA liability payments, anticipated tax liabilities and dividends to holders of our Class A common stock as well as pro rata cash distributions to holders of CC Units other than Cactus Inc.

As of June 30, 2023, we had $193.3 million of available borrowing capacity with $30.0 million of borrowings outstanding under our revolving loan, $25.0 million of borrowings outstanding under our term loan and $1.7 million in letters of credit outstanding.

In July 2023, we made $25.0 million in payments to our term loan lenders which reduced the balance of our term loan outstanding to zero and repaid the $30.0 million outstanding under our revolving loan.

As a result of these payments, we had no bank debt outstanding as of the date of this filing.

We were in compliance with the covenants of the Amended ABL Credit Facility as of June 30, 2023.

In June 2023, our board of directors authorized the Company to repurchase shares of its Class A common stock for an aggregate purchase price of up to $150 million.

Under our share repurchase program, shares may be repurchased from time to time in open market transactions or block trades, in privately negotiated transactions or any other method permitted under U.S.

securities laws, rules and regulations.

The repurchase program does not obligate the Company to purchase any particular amount of shares, and the repurchase program may be suspended or discontinued at any time at the Company’s discretion.

We believe that our existing cash on hand, cash generated from operations and available borrowings under our Amended ABL Credit Facility will be sufficient for at least the next 12 months to meet working capital requirements, debt service obligations, anticipated capital expenditures, repurchases of shares of our Class A common stock, expected TRA liability payments, anticipated tax liabilities and dividends to holders of our Class A common stock as well as pro rata cash distributions to holders of CC Units other than Cactus Inc.

We currently estimate our net capital expenditures for the year ending December 31, 2023 will range from $35 million to $45 million.

In the Pressure Control segment, capital expenditures will be primarily related to rental fleet investments, the recent purchase of our previously leased Odessa, Texas branch facility, international expansion and development of a recently-leased research and development facility in Houston, Texas.

In the Pressure Control segment, capital expenditures will be primarily related to rental fleet investments, the March 2023

purchase of our previously leased branch facility in Odessa, Texas, international expansion, diversification of our low cost supply chain and development of a recently-leased research and development facility in Houston, Texas.

In the Spoolable Technologies segment, capital expenditures will be primarily related to manufacturing plant enhancements and additional deployment equipment to facilitate installation of recent product introductions.

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If necessary, we could choose to further reduce our spending on capital expenditures and operating expenses to ensure we operate within the cash flow generated from our operations.

Three Months Ended March 31, 2023 Compared to Three Months Ended March 31, 2022

Six Months Ended June 30, 2023 Compared to Six Months Ended June 30, 2022

The following table summarizes our cash flows for the periods indicated:

Three Months Ended

Six Months Ended

(in thousands)

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Net cash provided by (used in) financing activities 190,687 (24,165)

Net cash provided by operating activities was $60.5 million and $17.2 million for the three months ended March 31, 2023 and 2022, respectively.

Net cash provided by operating activities was $168.5 million and $48.2 million for the six months ended June 30, 2023 and 2022, respectively.

Operating cash flows for 2023 increased primarily due to an increase in income and a decrease in cash outflows associated with working capital, largely related to decreased purchases of Pressure Control inventories.

Net cash used in investing activities was $633.2 million and $7.3 million for the three months ended March 31, 2023 and 2022, respectively.

Net cash used in investing activities was $639.5 million and $12.9 million for the six months ended June 30, 2023 and 2022, respectively.

The increase was primarily due to cash paid to acquire FlexSteel for $624.2 million less $5.3 million in cash acquired.

1 unchanged sentence

Lastly, proceeds from sales of assets increased approximately $2.2 million from 2022.

Net cash provided by financing activities was $303.2 million for the three months ended March 31, 2023 as compared to net cash used in financing activities of $14.2 million for the three months ended March 31, 2022.

The increase in net cash provided by financing activities was primarily related to certain equity and debt financing activities in the first quarter of 2023 associated with the FlexSteel acquisition.

Net cash provided by financing activities was $190.7 million for the six months ended June 30, 2023 as compared to net cash used in financing activities of $24.2 million for the six months ended June 30, 2022.

The increase in net cash provided by financing activities was primarily related to certain equity and debt financing activities in 2023 associated with the FlexSteel acquisition.

We received approximately $169.9 million of proceeds, net of issuance costs, from issuing shares of our Class A common stock during the period.

Additionally, we received $155.0 million from total borrowings under our Amended ABL Credit Facility.

Payments of approximately $6.7 million in debt issuance costs and higher dividend payments of approximately $0.7 million partially offset these increases in net cash provided by financing activities during 2023.

Additionally, we received $155.0 million from total borrowings under our Amended ABL Credit Facility of which $100.0 million was subsequently repaid prior to June 30, 2023.

Payments of approximately $6.8 million in debt issuance costs, increased distributions to members of $1.4 million, higher dividend payments of approximately $1.1 million and $0.6 million of additional payments on finance leases partially offset the aforementioned cash inflows from debt and equity financing during 2023.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis